Amaranth sues JPMorgan for $1 billion

Amaranth Advisors, LLC, has filed a lawsuit against JPMorgan Chase seeking more than $1 billion in damages. Amaranth, the Greenwich, Conn., hedge fund that lost $6.5 billion and folded due to ill-timed energy investments in September 2006, said that New York-based JPMorgan Chase & Co. hindered its efforts to avoid collapse, according to a Bloomberg report. The summons was filed yesterday at the New York State Supreme Court. New York-based Goldman Sachs agreed to take Amaranth’s failing trades for a $1.85 billion concession, but the hedge fund’s broker, JPMorgan, refused to execute the deal, causing the fund to lose hundreds of millions of dollars as natural-gas prices continued to drop, according to court documents cited by Bloomberg. The lawsuit alleges that Chicago-based Citadel agreed to take on the energy portfolio for a $1.85 billion concession but that JPMorgan stopped that transaction. JPMorgan then took over Amaranth’s energy trades and sold them to Citadel for $725 million, the suit claims.